Taxpayer using centre for data processing – Taxpayer claiming industrial building allowance – Capital Allowances Act 1990, section 18 – Whether centre “industrial building or structure” which subjugated “goods or materials” to any process – Commissioner and High Court holding taxpayer not entitled to industrial building allowance – Appeal dismissed
The taxpayer, Girobank, provided a large range of banking services to customers through its agents, Post Office Counters Ltd. In order to record the transactions made each day, Girobank developed a highly organised system for the prompt daily delivery to it, from the post offices, of the paperwork created, and a highly mechanised method of quickly processing at the centre in Wigan. The centre consisted of a single-storey building of modular construction. It contained 64,500 sq ft of open plan operational processing space and was exclusively used as a paper processing centre. At the centre the information about the various debits and credits to be made, contained in the documents received, were converted into information on magnetic tape which was then sent by telephone. All the cheques that were received for clearing were sorted into separate groups for prompt forwarding to the various clearing banks. There was a large number of special purpose machines which achieved the above processes. None of Girobank’s administrative function was carried out at the centre.
Girobank claimed an industrial building allowance for the centre under section 18(1)(e) of the Capital Allowances Act 1990. By section 18(1)(e) of the 1990 Act an “industrial building or structure” meant a building or structure in use for the purposes of a trade which consisted in the subjection of goods or materials to any process. By virtue of section 18(4), notwithstanding subsection (1), an “industrial building or structure” did not include any building or structure if any part of it was in use as an office. A commissioner held that although the centre was not used as an office it was also not used for the purposes of a trade consisting in the subjection of “goods or materials” to a purpose. Girobank appealed. The High Court dismissed the appeal holding that although the centre was in use for the purposes of a trade which consisted in the subjection of goods or materials to a process, but it was also used as an office. Girobank appealed.
Held The appeal was dismissed.
The commissioner had found, inter alia, that the transaction documents were not received at the Wigan centre as goods but were information, instructions or requests, which were not held as stock in trade or inventory of the business and were not sold on by Girobank. Therefore, he had been entitled to hold on those facts as found that the items to which procedures at the Wigan centre were applied were not “goods or materials” within section 18(1)(e) of the 1990 Act. Therefore the centre was not with section 18(1)(e) of the Act and Girobank was not entitled to an industrial building allowance: Buckingham (Inspector of Taxes) v Securitas Properties Ltd [1980] 1 WLR 380, followed.
Peter Whiteman QC and David Waksman (instructed by Simmons & Simmons) appeared for the appellant; Timothy Brennan (instructed by the solicitor to the Inland Revenue) appeared for the respondent.
